There are three parties to a bill of exchange. They are:
1. Drawer
2. Drawee
3. Payee

(i) Readymade Software
(ii) Customised Software

Amount of depreciation per year = \(Original\ cost\ of\ the\ asset − Estimated\ scrap\ value\over Estimated\ useful\ life\ of\ the\ asset\ in\ years\)
\(={1,00,000 – 10,000\over 10}={90,000\over 10}\) = Rs. 9,000 per year
When it is plotted on a graph for 5 years, it appears as follows:

The following are the different methods of providing depreciation:
(i) Straight line method or Fixed instalment method or Original cost method
(ii) Written down value method or Diminishing balance method
(iii) Sum of years of digits method
(iv) Machine hour rate method
(v) Depletion method
(vi) Annuity method
(vii) Revaluation method
(viii) Sinking fund method
(ix) Insurance policy method

The process of allocation of the cost of a fixed asset oyer its useful life is known as depreciation

(i) An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.
(ii) The benefit usually accrues for a period of two or more years.
(iii) It is for the time being, deferred from being charged against income.

i) a) Rs.2,000 spent on additions should be treated as capital expenditure
b) Rs.1200 spent on repairs should be treated as revenue expenditure.
ii) Overhauling expenses are incurred for the engine of a motor car to get better fuel efficiency. So this expenditure should be treated as capital expenditure.

Value of trust is being violated by the accountant by passing a dummy entry and not even informing the seniors about it.

(i) Historical cost concept
(ii) Accounting period concept
(iii) Verifiable objective concept

It is the amount of cash or value of goods, assets, etc., withdrawn from the business by the proprietor for his personal use

(i) The Consistency convention implies that the Accounting practice should remain the same from one year to another.
(ii) The results of different years will be comparable only when same accounting methods are followed from year to year.
(iii) The firm should be modify the method of charging the depreciation from one to another.
(iv) If any change has to be incorporated, valid reasons for such a change should be emphasised.

There are several persons who need the accounting information for various purposes. They can be classified into two.
(i) Internal users :
1. Owners
2. Management
3. Employees
(ii) External users :
1. Creditors and Financial institutions
2. Investors
3. Customers
4. General public
5. Tax authorities and regulatory bodies
6. Government
7. Researchers

(i) Heavy cost of installation:
Computer hardware needs replacement and software needs to be updated from time to time with the availability of newer versions.
(ii) Cost of training:
To ensure effective and efficient use of computerised system of accounting, newer versions of hardware and software are to be introduced.
(iii) Fear of unemployment:
On account of the introduction of computerised accounting system, the employees feel insecure that they may lose employment and show less interest in computer related work.

Trial balance is prepared with the following objectives:
(i) Test of arithmetical accuracy:
Trial Balance is a means by which the arithmetical accuracy of the book-keeping work is Checked.
(ii) Basis for preparing final accounts:
Financial statements, namely, trading and profit and loss account and balance sheet are prepared on the basis of summary of ledger balances obtained from the trial balance.
(iii) Location of Errors:
1) When the Trial balance does not tally, it is an indication that certain errors have occurred.
2) The errors may have occurred at one or more of the stages of the accounting process, namely, journalising or recording in subsidiary books, totalling subsidiary books, posting in ledger accounts, balancing the ledger accounts, carrying ledger account balances to the trial balance, totalling the trial balance columns, etc.
(iv) Summarised information of Ledger Accounts:
1) The summary of ledger accounts is shown in the trial balance.
2) Ledger accounts have to be seen only when details are required in respect of an account

The need for accounting standards is as follows:
1. To Promote better understanding of financial statements.
2. To help accountants to follow uniform policies and practices.
3. To facilitate meaningful comparison of financial statements of two or more entities.
4. To enhance reliability of financial statements.
5. To meet the legal requirements effectively.

Yes, Accounting information should be comparable because,
i) It helps to make inter-firm comparisons, i.e., to find out how a firm has performed as compared to the other firms.
ii) It helps to make inter-period comparisons, i.e., to find out how it has performed as compared to the previous years.

(i) Only financial transactions are to be recorded because it is due to Money Measurement concept, which states that only those transactions are to be recorded in the books of accounts which consist of cash.
(ii) Hence it is concerned with the Nominal value not the real value.
(iii) For example Mohan purchase television for Rs.12,000. So this, will recorded in journal entry book as it has cash transactions.

(i) Investors :
1. Persons who are interested in investing their surplus funds should know about the financial condition of a business unit while making their investment decisions.
2. They are more concerned about future earnings and risk bearing capacity of the organisation which will affect the return to the investors.
(ii) Government :
1. The scarce resources of the country are used by business enterprises.
2. Information about performance of business units in different industries helps the government in policy formulation for development of trade and industry, allocation of scarce resources, grant of subsidy, etc.
3. Government also administers prices of certain commodities.